Healthcare showing initial signs of trying to bottom - Mean Reversion candidate for Q4

Equity trends remain bullish but fragile as November gets underway. Treasury yields and the US Dollar look to all be close to beginning a corrective pullback, which likely starts in November, but should prove short-lived and not the start of a larger decline. Minor SPX decline, which has reached two straight weeks, has failed to do much damage, and Friday’s intra-day reversal might have been the start of a pushback to fractional new high territory. While intermediate-term bullish thesis remains very much intact, the degree of breadth deterioration is getting to be a concern towards thinking that Equity indices require consolidation sometime in the next 4-6 weeks. Signs of both Healthcare and Technology acting well should provide a tailwind towards gains into/post-election.  However, any rally back to new highs makes the risk/reward more unfavorable for weakness into early December.  SPX should find initial resistance near 5900-5935. Meanwhile, QQQ should find resistance at 503-505.

The SPX held where it needed to and started to turn back higher Friday, led by both Healthcare and Technology, despite the minor AAPL weakness.

It’s thought that it’s still difficult to make much of this past week’s minor weakness. However, the low breadth readings could make the weeks ahead prove tricky and volatile.

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